The European Commission on Wednesday appealed for joint European action against market speculators shortly after Germany announced a temporary ban on naked short selling of some financial instruments.

Michel Barnier, the European Commissioner for Internal Market and Services, said in a statement that he “fully understands”German concerns about possible negative impacts of naked short selling.

But he said the measures against naked short selling would be even more efficient if they are coordinated at the European level.

"It is important that member states act together and that we design a European regime to avoid regulatory arbitrage and fragmentation both within the EU and globally," he said.

Barnier said the effort has been his “top priority” and a task force has been set up by the Commission to work on the issue.

“My intention is to have a formal Commission proposal ready in October this year,” he said.

The German financial regulator, BaFin, decided Tuesday to implement a temporary ban on naked short selling and naked credit-default swaps of euro area government bonds. The new regulation took effect Wednesday and will last until March 31, 2011.

The German government said that credit default swaps are being used by market speculators for betting against euro zone countries’debt, such as Greece’s, which has fueled the euro crisis.

"It's about nothing less than the defense of the European idea,”German Chancellor Angela Merkel said.